Q & A on UK Pension Transfers
Recent rule changes have made it harder to transfer British pensions to New Zealand.
British rule changes meant KiwiSaver schemes have lost their Qualifying Recognised Overseas Pension Scheme (QROPS) status.
A QROPS is a scheme that meets requirements set out by Britain’s HM Revenue and Customs and can accept transfers without the 55% penalty tax that would otherwise be applied.
UK non-funded state pensions, such as those held by people working in the health sector, also can now not be transferred internationally.
On New Zealand’s side, the way non-Australian foreign pensions are taxed has changed.
In the first four years as a resident there is no tax payable. It then increases every year so that after 25 years, the full amount is taxable. An amnesty in 2014 allowed some leeway for those who had not paid the right tax.
Alun Rees-Williams, of pension transfer and financial advice provider Britannia said there was a lot of confusion in the market. He had been contacted by one person who thought transfers were not possible at all any more because KiwiSaver providers could not do it.
The loss of the right to move non-funded state pensions had also put a dent in the marketplace, he said. Rees-Williams estimated up to about a third of the market previously had been those pensions.
Some providers had expected to get busier when KiwiSaver schemes lost their QROPS status, he said, but the reverse seemed to have happened. He predicted the activity would return but not to the surge levels before the end of the tax amnesty. “It’s got to build up again,” he said. “There are still valid reasons to do it.”
But Tony Chamberlain, of GB Pensions, said he had noticed an increase in inquiries since the beginning of the last quarter of last year. He said that could be due to the firm beginning to be recognised as specialists in pension transfers, or because people who might otherwise look to their KiwiSaver providers for help were turning elsewhere. “We were getting inquiries on our website even on Christmas Day.” He said GB Pensions was working on a new product that would be more effective than QROPS for some people. He could not yet provide details.
Using our proven processes we have assisted clients transfer their UK Pensions to NZ.
Her Majesty’s Revenue and Customs (HRMC) have recently put a hold on further transfers until some tax matters are resolved, however we are happy to discuss your situation with you and to keep you informed as our IRD and HMRC work through the issues.
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